Protecting and Growing Self and Wealth in These Uncertain Times

U.S. Mint

“If investors can’t buy Silver Eagles, they can also buy other coins like Canadian Maple Leaf silver coins, which are minted by the Canadian government and are ‘just as good.’”

-Peter Schiff, President/Chief Global Strategist of Euro Pacific Capital and CEO of Euro Pacific Precious Metals, in a January 19 article on the ABC News website that noted the U.S. Mint had stopped selling 2013 American Eagle silver bullion coins

First, the U.S. Mint halted the sale of 2013 Silver Eagles.

Now, the Royal Canadian Mint is limiting sales of 2013 Silver Maple Leafs.

Daniela Cambone of Kitco News reported the following on The Globe and Mail (Canada) website last Firday:

Following news last week that the U.S. Mint had run out of its initial production of 2013 Silver Eagles, reports were circulating on industry blogs that the Royal Canadian Mint was next in line after suffering a silver shortage.

Confirming this strain on physical silver supplies, the mint this morning went on allocation, limiting the quantity of sales of the popular Silver Maple Leaf coin.

“Due to very high demand for Silver Maple Leaf bullion coins, the Royal Canadian Mint is carefully managing supply to ensure all our bullion distributors are served and we continue to take orders,” Alex Reeves, senior manager, communications for the Royal Canadian Mint, told Kitco News this morning.

(Editor’s note: Italics added for emphasis)

These latest developments at the U.S. and Royal Canadian Mints- in conjunction with HSBC’s recent large purchase of silver bullion from KGHM Polska Miedź S.A., the world’s largest silver miner- are fanning rumors of a possible physical silver shortage going on. From the Dubai Chronicle (UAE) website Sunday:

News that HSBC has concluded a second large purchase of silver bullion has sparked speculation that there is a physical silver shortage in the markets.

Earlier in the week, a news about the U.S. Mint temporarily running out of Silver Eagle coins added to the momentum. Many of the latest rumors about physical silver shortage talk about the relationship between physical silver-actual silver bullion-and paper silver, which is the silver that exists only on paper in the form of exchange-traded funds (ETFs) or futures contracts. Some market observers have speculated that there isn’t enough physical silver currently available to make delivery to all of the owners of silver futures, which would result in a “default” by the Comex where the silver contract is traded.

Whether these issues are actually reflective of high demand, problems with the mints’ supply chains, or games being played in the silver bullion market by outside forces or silver traders, remain in question.

(Editor’s note: Italics added for emphasis)

A follow-up piece by the Dubai Chronicle suggested silver production looked to be more than adequate in 2012. From the January 29 article:

In response to the recent physical silver shortage speculations, we researched data provided by mining companies for their performance in Q4 of 2012 and the past year in general. According to what the companies state, most of them increased silver production between 2% to 15% and aim to rise production further in the course of 2013.

(Editor’s note: Italics added for emphasis)

And a recent Money Morning article noted Kitco Senior Analyst John Nadler claims there are 207 million ounces of surplus silver overhanging the markets.

Still, stories of silver shortages, like this one by Matterhorn Asset Management founder Egon Von Greyerz on on the King World News Blog back on January 18, are making the rounds on the Internet these days.

A week ago, I blogged about Dennis Gartman of The Gartman Letter-fame and his warning about buying gold coins. Gartman spoke of Main Street “piling into gold” recently.

He wasn’t kidding.

Jack Farchy of the Financial Times (UK) reported on the CNBC website this morning:

Demand for gold coins in the US has soared since the presidential election, as small investors fret about the lack of action to address America’s ballooning debt.

The US Mint’s sales of American Eagles, one of the most popular gold coins, leapt 131 percent in November, hitting their highest level in more than two years. The Royal Canadian Mint also had its strongest month of sales this year.

Gold observers may have noticed “paper gold” really hasn’t reflected such recent demand. However, it’s a different story with the “physical gold” market. From the piece:

“The institutional investors cut back and are more on the sidelines now,” said James Steel, head of precious metals strategy at HSBC in New York. “But the coin market is dominated by retail investors and the man on the street is still pretty committed to gold.”

And dealers are reporting rising demand- and sales- of gold coins. Along with something else. Mark O’Byrne of international bullion dealer GoldCore wrote on the International Business Times website on December 3:

Bullion dealers in the U.S. report an influx of high net worth individuals that are buying gold coins in volume and taking physical possession of their bullion.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

While the recent downturn in precious metal prices has caused many to head for the exits, others have used the decline to acquire even more gold and silver. This includes gold and silver bullion coins sold by the United States Mint. Debarati Roy wrote on the Bloomberg website this morning:

The U.S. Mint’s sales of American Eagle gold coins in May more than doubled from April as prices of the precious metal declined.

Sales were 53,000 ounces, compared with 20,000 ounces in April and 62,500 ounces in March, according to the Mint’s website. Sales of American eagle silver coins rose 89 percent in May to 2.88 million ounces from April.

To be fair, sales of these coins are well-off the levels when compared to the same time last year. A Reuters’ piece on CNBC.com this morning pointed out:

The U.S. Mint reported its American Eagle gold coin sales fell by more than half in May, to 50,000 ounces from 107,000 ounces a year before. May sales were more than double those of April, however.

Its silver American Eagle coin sales also fell by more than 900,000 ounces year-on-year to 2.75 million ounces.

With the huge spike in gold and silver prices today, it will be interesting to see what’s in store for these precious metals in the coming days.

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